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Practice Management > Building Your Business

Values Advisor

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I am now in my 24th month of independence. As you read my account of this journey, I recognize that some of you are already on this path, some are contemplating it, and the rest are quite sure, at least for the time being, that running an independent advisory firm is not part of the plan. That’s perfectly fine. Running a business is not for everyone. But for those who are game, even for those who are simply curious, I hope to provide some unique perspectives and meaningful insights into this wonderful world of independence. The information that follows is intended to convey, in real time, what lies ahead for those interested in pursuing the independent route.

The Road So Far

My journey officially began on April 1, 2007, the day I left my secure corporate environment as a senior financial planner with one of the largest banks in the world and opted for independence in Baton Rouge, Louisiana, in my own firm: Integrity Wealth Management. I had previously worked for a global wirehouse, a regional brokerage firm, and another bank in the Northeast, but by 2007, I needed a change.

While there was some security and name recognition in being with a big firm, I was frustrated because I was trying to serve clients in the best way I could, but was kept from doing so by an employer who had its own best interests–and products–at heart. Moreover, the inflexibility and bureaucratic nature of a large Wall Street firm stifled my flexibility and creativity, and the only party getting any richer in the process was the parent company (as the old Wall St. joke goes, “two out of three ain’t bad”).

So I decided to strike out on my own, but was doing so without my own significant book of business. I had a plan to build up my client roster, however. In fact, though I had thoroughly and methodically planned for every contingency, or so I thought, unforeseen issues arose right away. One such example occurred right at the beginning when I selected a particular broker/dealer. At the eleventh hour, circumstances changed–that is, my understanding of how I would work with this leading independent broker/dealer turned out to be different from the B/D’s understanding–so I decided not to affiliate with that specific broker/dealer.

There I was, on my own with no place to custody assets. In retrospect, it turned out for the best. I wound up changing direction and became an RIA, a decision I’m very glad I made.

During my first few months, my income was derived primarily from financial planning fees. In my years as an employee investment advisor, I had never charged for planning and was a bit nervous the first time I quoted a fee to a prospective client.

There I was, looking directly into his eyes, when I said my fee for writing the plan “should cost between $2,000 and $3,000.” The prospective client never blinked. I was kicking myself for not asking for a higher fee! Well, this particular individual had a net worth in the tens of millions of dollars, so to him, I suppose, it was no big deal. I learned very fast that the wealthy are willing, and able, to pay for advice.

I also quickly realized that controlling expenses was one of the most important issues for a small business. I didn’t begin by renting office space or hiring any staff. I simply set up an office in my home and got to work. I did invest in technology, though. I bought a laptop and three printers–one high-quality color, one black and white, and an all-in-one unit for faxing, copying, and scanning.

Nine months into my journey, at the end of 2007, I had a total of three clients and around $2 million under management. In 2008, I added several million dollars more and have now reached a point where the business is stabilizing.

This past August, I moved out of my home and rented an office. I now have an 850-square-foot space with a nice reception area, an executive office, two smaller offices, a full kitchen, and a private bathroom. There is enough space here to accommodate the growth of my business for several years.

Advisor Value and Client Acquisition

Many years ago, I realized that for an advisor to be successful, he must offer something of value to the client. It’s equally true that there are a limited number of “value metrics” by which an advisor can create a differentiation between himself and his competition. An advisor must not only have a well-defined story to tell, but the story must be substantive and easily digestible by a client. Let’s explore the advisor-client relationship.

There are basically three groups of advisors–good communicators, good technicians, and those who possess both qualities. I believe it is this third group which has the greatest potential for long-term success, and that’s because it’s tied up with why clients choose a particular advisor? Let’s take a look at some basic principles which greatly influence client acquisition and how I have addressed it.

I find that most clients choose their advisors based not on a set of factual, logical data, but rather from an intuitive, emotional perspective. Maybe the advisor told a good story and made the client feel comfortable. Perhaps they were referred by a trusted friend. In any event, the reason a client chooses an advisor, or makes any other decision for that matter, is because they instinctively “feel” it is the right thing to do. Why this disconnect between fact and feelings? I believe it is due, at least in part, to the fact that we’re all emotional creatures and that clients, in particular, really don’t understand our business. They may be very intelligent people, and accomplished in their own areas of expertise, but most couldn’t tell you the difference between a brokerage operation and an RIA platform.

In my practice, I’ve created a document titled “What’s Important to You.” A prospective client simply reads each item on the list and then ranks the item’s importance. If they rank the items low, I’m probably not the right advisor for them and they should find someone better suited to their situation. However, if they rank the items high, meaning they view them as important, then it’s only a matter of their willingness to hire me, because the prospect’s values and mine coincide: those prospective clients know that I can deliver what is important to them.

So examine your business. Try and put yourself in the client’s position. Better yet, start a client focus group, something I plan to do in 2009. Twice a year, I will gather selected clients and ask questions such as: “What do you like about what I provide?” “What do you dislike?” and “What can I do to improve my services?” How do you find out what the client wants? You ask them!

Efficient Processes and Client Acquisition

Every business needs well-defined processes to create an efficient workflow. Efficient processes are very important, especially with smaller businesses. This is an area where the independent advisor has a distinct advantage over very large firms. Large firms are frequently wrought with inefficiencies and bureaucratic nightmares, and such bureaucratic inefficiencies are a major source of client (and employee) frustration.

You’ll also need a well-thought-out plan of action as it pertains to the initial meeting with a prospective client. The way you conduct that meeting will determine, to a great extent, whether or not this individual hires you. There are several good strategies for accomplishing this, but after much trial and error, here’s what I’ve decided.

Prior to the first meeting, I’ll e-mail to the client the aforementioned “what’s important”document.The client will fill it out and return it to me prior to our meeting. Equipped with this information, I can now identify many of the client’s key concerns.

Here’s how the first meeting usually progresses. After some initial small talk, I’ll ask open-ended questions designed to get them talking. I need to learn as much about them as quickly as possible. They also need to feel very comfortable because the more comfortable they are, the more open they will be. The key here is to let them do most of the talking.

After I’ve learned about them, it’s time to inform them about myself and my practice. As they relax in a nice comfortable leather chair, perhaps sipping on their favorite beverage, we’ll focus our attention on the 24-inch wall-mounted monitor. Using Excel in concert with a simulation program, I’ll demonstrate my capabilities in the areas of financial planning and portfolio management. As the numbers dance on the screen during the simulation, they can clearly see the value of this very dynamic process.

Next, I’ll display a sample plan document, again on the larger screen. The point here is to demonstrate the value of what I do, and how thorough and methodical my approach is. I also want them to feel like they can ask any question they desire. Being completely transparent is important, especially in today’s environment.

Client Retention, Technology and Efficiency

Once prospects become clients, it’s important to retain them. Remember, most clients want to hear from you with some regularity. Quarterly portfolio reviews are important. At the end of each calendar quarter, I send an e-mail to remind them it’s time to review. If I don’t hear back in a week or so, I send a reminder. The client can certainly opt out of the review if they wish, but I still make the offer.

The portfolio reviews and annual planning updates are carried out in my conference room where we sit around the conference table and view their information on a 32-inch plasma TV. You might call it financial planning delivered in hi-def. If we need to see more detail, the appropriate document is always on the table. In addition to the in-person meetings, I call each client periodically, not to sell them some product, but to bring to them something of value, or perhaps to simply “check in.”

Whether you’re in business as a one-man operation or you have multiple employees, technology can be extremely beneficial in the battle for efficiency. I’ve found our industry suffers from a lack of solutions that integrate all of the necessary aspects of an advisor’s business. The fact that most technology solutions are not integrated results in a fragmented approach in serving client needs. For example, an advisor’s Web site is often nothing more than an electronic brochure. Such sites lack the dynamic content necessary to bring the client back on an ongoing basis. I’ve found a product which tackles these and other issues and should greatly improve the process of attracting and retaining clients.

The name of the company and the product are the same, Manage-Trak. They provide advisors with a technology, practice management, and proactive marketing platform which will integrate an advisor’s Web site with core business practices and systems. At its core, it provides a “client Intranet” type of experience, creating a communication bridge between the advisor and client. Through this client portal, the client can access educational content, account values, send and receive messages to the advisor, store documents, create tasks for client and advisor alike, and view alerts the advisor has sent.

Through Advisor Center, which is the CRM portion of Manage-Trak, the advisor can track activity on the site to see which areas the client is visiting. An advisor can also manage client messages, tasks, alerts, and access a wide variety of practice management resources. The price is also very reasonable.

Doing It My Way

I realize there are many ways an advisor can approach this business. What I have shared with you works for me. I sincerely hope this article has provided useful information which will prove helpful in improving your value to the client.

For more information on how I’m tackling the ongoing and new challenges in my growing practice, I invite you to interact with my Road to Independence blog at I’ve already profited from the suggestions made by many of you responding to my weekly posts, and I believe some of you have benefited from my experience as well. After all, we independents should stick together for our own benefit, as well as our clients’.